Investing in the Future London, December 2005
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Climate Change Risks and Opportunities
Oliver Dudok van Heel
Investing in the Future London, December 2005
Climate Change & the Financial Sector:An Agenda for Action
Andrew Torrance, CEO Allianz Cornhill
London, December 2, 2005
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Agenda
1 Facts on Climate Change
2 Climate Change & the Financial Sector
3 Agenda for Allianz Action
Investing in the Future London, December 2005
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Agenda
1 Facts on Climate Change
2 Climate Change & the Financial Sector
3 Agenda for Allianz Action
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Facts on Climate ChangeThe Facts
Hurricane activity increased
- Katrina costs: $60bn for insurance industry and $470m for Allianz Group
Weather disasters are hitting Europe hard
- 1999 storms, 2002 floods, 2003 heat wave
Governments react by curbing CO2 emissions
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Facts on Climate ChangeThe Facts
Global Warming
Temperature Rise overPast 100 years
Source: IPCC
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Agenda
1 Facts on Climate Change
2 Climate Change & the Financial Sector
3 Agenda for Allianz Action
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Facts on Climate ChangeThe Impact
Climate change increases claims for insurers
Climate change could have an impact on mortality and diseases
Climate policy can change investment portfolio and share price
Climate related risks can have an impact on all financial services
Investing in the Future London, December 2005
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Climate Change and the Financial SectorNew Risks, New Demands
Insurance
- climate change related losses are rising at 2- 4% per year
- larger, more frequent natural catastrophes
Banking
- credit risk is increasing due to uncertainty
- potentially large new “climate change markets” in emissions trading, re- newables, weather derivatives
Asset Management
- climate change is a mainstream risk and not a socially responsible investment (SRI) issue
- climate policy can alter the risk profile of companies
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Agenda
1 Facts on Climate Change
2 Climate Change & the Financial Sector
3 Agenda for Allianz Action
Investing in the Future London, December 2005
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Risk Mitigation and Investment OpportunityThe Agenda for Allianz Action
Address climate change at board level and put it on a par with other business risks when taking decisions
Screen climate change risks in our business through an internal task force
Increase investment in renewable energy sector by 500 million euros over the next years.
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Climate Change andthe Financial SectorNew Solutions
Awareness raising through risk consultancy: Consulting with clients and governments
Product Development: Upgrading to environmentally friendly technology
Climate Change and Poverty: Can micro-insurance provide a safety net against natural catastrophes?
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Tackling Climate Change: A View from the Finance Sector
Karina LitvackF&C Asset Management plc
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Debate
Why don’t companies invest more in clean technologies?
Why don’t investors channel more capital to clean technologies?
What does business want to do about Climate Change
What does business want from government?
How can the market be used to crack this problem?
What has worked before?
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Agenda
Introduction: Who is F&C Investors and Climate Change
Where we were and where we are What next?
Market failure The Business of Politics Mobilising the markets
Debate
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Who is F&C Asset Management
No. 4 UK asset manager – Top 15 in Europe: €190 billion Assets Under Management (£129.9 billion as at
30.09.05)
Global investor Long-term holdings: Pensions & Life Assurance Specialist in Governance & Sustainability
Growing activism of investment community Governance scandals Client and regulatory pressure to ‘mind the store’
Engaged shareowners: Dialogue and Advocacy
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Investors and Climate Change
Where we were Governance Risk Assessment Policies Strategy Targets Disclosure Energy efficiency Products Public Relations
Where we are An impasse Risk/Reward ratio Investment Horizon Lack of policy
clarity Market failure Political paralysis
EU ETS
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What next?
Market failure The Business of Politics What has worked
Health & Safety regulation: non-tradeable SOx and Acid Rain: tradeable
Mobilising the market Success of ETS in changing Utility Sector
valuations Impact of oil prices on Renewables IPOs
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What next?
The Business of Politics Has Governance implications …for Business …for Government
The Politics of Litigation When rules and markets fail Costly & disruptive
Global trading markets Corruption
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Climate Change Risks and Opportunities
Questions?